The Signal (weekly highlights)

1. World economy set to surpass $100 trillion in 2022

The world economy is set to surpass $100 trillion for the first time in 2022, two years earlier than previously forecast. Global gross domestic product will be lifted by the continued recovery from the pandemic, although if inflation persists it may be hard for policy makers to avoid tipping their economies back into recession

The forecast is in line with estimates of the International Monetary Fund, which also predicts global GDP measured in dollars and in current prices will pass $100 trillion in 2022

2. Bank NPAs ease to nearly six-year low

The pandemic-hit financial year was marked by a “discernible increase” in profitability, as banks’ income remained stable but expenditure declined, the Reserve Bank of India (RBI) observed in the annual Trends & Progress Report.

The declining trend in bad loans that started in 2018 continued during the pandemic year, which saw gross NPAs of scheduled commercial banks dropping to 7.3 per cent as of March 2021. It was 8.2 per cent in March 2020, and further to 6.9 per cent in September 2021.

3. Tighter IPO norms may help lower volatility

SEBI board voted to tighten the norms for shareholders with a stake of more than 20%, looking to sell a stake via an Offer for Sale (OFS). The rules apply to companies without a track record, and these shareholders can, post April 2022, sell only 50% of their holding on the day the company lists post an Initial Public Offering (IPO). Those owning a stake of less than 20% cannot sell more than 10% via an OFS.

The SEBI board has also voted to limit the amount that can be spent by a company on inorganic growth opportunities, in instances where there is intent mentioned in the offer document but no targets have yet been identified.

4. ICRA upgrades telecom services industry outlook to ‘stable’

The telecom tariff hike along with the recent relief package offers sufficient headroom for the industry to undertake deleveraging as well as fund capex for 5G tech upgrade

The hike coupled with consistent upgradation of subscribers to 4G from 2G and increase in usage of telephony services is expected to result in improvement in industry ARPU

5. Forex reserves dip by USD 160 million to USD 635.67 bn

The country’s foreign exchange reserves declined by USD 160 million to stand at USD 635.667 billion in the week to December 17. In the previous week ended December 10, the reserves had decreased by USD 77 million to USD 635.828 billion. It touched a lifetime high of USD 642.453 billion in the week ended September 3, 2021.

During the reporting week ended December 17, the dip in the forex kitty was on account of a decline in foreign currency assets (FCAs), a major component of the overall reserves. FCAs tumbled by USD 645 million to USD 572.216 billion